“Do I need shareholder protection? Why do I need shareholder protection? How can I get one? Whom to ask for guidance?” These questions such common and important ones, but often ignored after the initial thoughts. As grim as it sounds, it is also real that life changes are unexpected and can throw you off the balance if unprepared. Hence, shareholder protection is an important step in securing the financial future of your company at the event of the untimely death of the shareholder of the company. It serves like inuring the future of the company while the insurance is aimed at the shareholder. Let’s dig deep into this insurance cover and understand how your company can reap the maximum benefits.

As you already know, shareholder insurance insures the life of the shareholder, protecting the company from the untimely death or diagnosis of a serious illness in the shareholder. At the time of death, other shareholders of the company can buy the shares of this person by giving a duly agreed amount to the family members of the deceased person. The amount received by the rest of the shareholders can be used to invest back in the company or be sold to another person, the decision for which is mutually agreed by remaining shareholders.

There are three main types of shareholder protection. First one is where each owner gets their own policy with insurance is based on age, lifestyle and health. The payout, if the person dies, is made to the surviving shareholders so that they can use the money to buy the shares. The second one is where each owner will have a policy written in the form of a business trust, which, when the person dies, gets divided amongst everyone equally. The third one is where a company buys and pays the premiums, and when the shareholder dies, the payout is transferred to the company.

The shareholder agreement will help you set the rights and obligations of the shareholder, regulate the sale of shares, detail the protection of the minority shareholders, define ways to make important company decisions and describe ways to run the company after the shareholder’s death.

Speak to Kapil Mathur, an expert in securing the financial future of many organisations, to help you out with finding the best policy with the double option agreement. He is also an expert in setting guidelines in the agreement for minority and majority shareholders and will help you decide the best agreement as per your company structure and size.

Shareholder Insurance

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